
is a tool used by businesses to determine the level of sales needed in order to break even. The tool can also be used to determine the level of sales needed in order to achieve a specific profit.
Variable unit cost - Cost associated with producing an additional unit.
Fixed cost - The sum of all costs required to produce any product. This amount does not change as production increases or decreases.
Expected unit sales - The number of units that are expected to be sold.
Price - Price you will be able to receive per unit.
Total variable costs - The product of units produced and variable unit cost (example 10 units at $5 variable cost produces a total variable cost of $50).
Total costs - Sum of fixed costs and variable costs.
Total revenue - Product of price and expected sale unit sales (example 10 units at $10 equals $100 total revenue).
Profit - Total revenue minus total costs.
Break even - Number of units required to sell to make a profit of zero.
The U.S. financial and credit crisis led to the dramatic failures of such U.S. financial institutions as Lehman Bros, Bear Stearns, Merrill Lynch, AIG, Washington Mutual, and the government take over of Fannie Mae and Freddie Mac. Find out what caused this financial and credit crisis that may lead the country into a recession or worse.
This financial and credit crisis has caused a dramatic rise in bank failures in 2008. Click here for a list of failed banks.